Short term
Trade view / 08 September 2016 at 5:08 GMT

Tight range candles in the SWE30 are prelude to volatility


The current tape of the OMXS30.I (SWE30.I) has been moving higher with various degrees of momentum since the Brexit lows. The tape has, from the swing higher off August 22 through, been especially dull, but has been going higher nonetheless. 

On September 5, the market managed to perform a Doji candle, followed by a larger range candle on September 6. Yesterday we printed another Doji, but the high mark of the current phase off the Brexit lows in June is thus far made up by that larger range candle. This implies the market is currently in balance, but there is reason to believe things won't stay this way.

Looking at the technicals we on Tuesday experienced a close outside the BollingerBands® which often implies a pullback is due. On the other hand we have oscillators in bullish positions without an obvious divergence, which is indicative of a strong market. Mixed signals.

Tuesday's candle (the longer range body) marked a high at 1445, which is a Gann pivot. The low of that candle is located at 1433. The 1433 – 1445 is currently no-man's land. A break higher out of the range opens the way for a move towards resistance at 1457, 1464 and ultimately 1471 if things goes well for bulls. 

A break lower out of the range would open up the path to 1426, 1419,1407 and possibly even 1396.

Management and risk description

The strategy appears quite clear and the plan is to await signals from the market. So, a break above 1445 calls for going long with targets of 1457, 1464 and 1471. The stop could initially be placed at 1 433. 

A break lower, out of the range calls for shorting the index with targets of 1426, 1419, 1407 and 1396 with a stop at 1445.

In both cases above, once the first target has been breached one can move the stop to entry. The idea is to stay with the position until at least the second target has been reached.

The main risk to breakout trades are fake breaks, i.e. a market that breaks support or resistance only to break back into the range. 

Parameters bullish case

Entry: buy a break above 1445.

Stop: 1333.

Target: 1457, 1464 and 1471.

Time horizon: 1 – 2 days.

Parameters bearish case

Entry: sell a break below 1433.

Stop: 1445.

Target: 1426, 1419, 1407 and 1396.

Time horizon: 1 – 2 days.

SWE30.I daily chart
SWE30.I daily chart
SWE30.I daily development chart
SWE30.I daily development chart
 Source: Saxo Trader. Create your own charts with SaxoTrader; click here to learn more 

— Edited by Gayle Bryant

For more on equities click here

Non-independent investment research disclaimer applies. Read more
08 September
DudetteUK DudetteUK
Super Mario chose his side :-)
08 September
Johan Berntorp Johan Berntorp
:) hope it is a descive one.
09 September
Johan Berntorp Johan Berntorp
Five waves down from Intraday peak. If one doesn't want to hold over the weekend now could be a good time to close this out a fraction in profit.
09 September
Johan Berntorp Johan Berntorp
We got a bounce from 1426, when price establish itself below that level 1415 should be next with an intermediate support at 1419.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail